GM offers $500 discount, free loaners to owners of recalled cars

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DETROIT -- General Motors is offering the 1.37 million U.S. owners of cars recalled for a faulty ignition switch a $500 cash allowance toward the purchase or lease of a new car, and is advising dealers to offer loaners to concerned customers.

In a March 4 notice to dealers, posted today on the National Highway Traffic Safety Administration Web site, GM said the cash offer is good toward any 2013-2015 model year Chevrolet, Buick, GMC or Cadillac.

"GM will not market or solicit owners using this allowance," the notice reads. "We ask that you not market to or solicit these customers either. This allowance is not a sales tool; it is to be used to help customers in need of assistance."

Customers who request a loaner will be able to use it until their car is fixed. GM also said it would pay to have vehicles towed to the dealership for those who request it.

The Wall Street Journal reported the discount earlier.

The notice says that GM will begin around April 7 to make repairs to the recalled vehicles, which include model years 2005-07 Chevy Cobalts; 2007 Pontiac G5s; 2003-07 Saturn Ions; 2006-07 Chevy HHRs; and the 2007 Pontiac Solstice and Saturn Sky.

GM faces a Congressional probe and U.S. Justice Department investigation into its handling of the global recall of 1.6 million vehicles with faulty ignition switches, which have been linked to 12 deaths. GM previously cited 13 related fatalities, but on Tuesday revised the total to 12, saying it double-counted one death.

On the recalled cars, there is a risk that the ignition switch can move out of the "run" position, causing the engine to shut off and air bags to deactivate. The risk increases if the key ring carries extra weight or is jarred from rough road conditions or other impacts.

GM's notice also reminded dealers to advise customers that they should remove all items from their key rings, including their key fobs.

Also on Wednesday, auto safety advocates Clarence Ditlow and Joan Claybrook, who have criticized GM for not issuing a recall sooner, called on the automaker to create a $1 billion trust fund to compensate victims of safety defects in its vehicles. GM is not liable for incidents that occurred before its 2009 bankruptcy; it appears that most of the 12 deaths linked to the recall happened before the bankruptcy.

"By concealing the ignition key defect for at least 10 years, GM created more victims and then robbed them of their legal rights through the passage of time," Ditlow, head of the Center for Auto Safety, and Claybrook, president emeritus of Public Citizen, wrote in a letter to CEO Mary Barra dated today.

In response to the letter, GM referred to a previous statement:

"GM is focused on ensuring the safety and peace of mind of our customers involved in the recall. It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009.  Our principle throughout this process has been to the put the customer first, and that will continue to guide us."

Nick Bunkley contributed to this report.

You can reach Mike Colias at mcolias@crain.com.


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